Build the Fort to Protect Your Business

Posted on June 17, 2014 by B2BCFO

Guard your organization from threats and dangers through improved business operations and proper insurance coverage.

In previous posts, I’ve discussed how an insurance company’s job is to deny claims. To protect you from those denied claims, I provided you with a chart to help you identify and stratify risks to make sure you get the appropriate coverage to minimize business threats. For this one, let’s talk about building your company fort to protect your business.

In this series of posts, I’m discussing mitigating risk with insurance. How do you ensure that your claim will be paid and not denied? It takes building a business fort of coverage and teamwork with your insurance agent.

It is sometimes difficult to focus on what could go wrong with your business when you have been working so diligently to grow it. But try applying a little Murphy’s Law and apply the four main risks I’ve outlined in a previous blog. Once you’ve identified the risks, it is time to fortify your business which in turn will help you determine the appropriate insurance coverage.

Fort materials – 2 broad categories.

There is a wide variety of materials you may use to build your fort or business protection. As kids, we used to build them out of blankets draped over chairs. Or if you lived in cold country, you probably built snow forts to keep out marauding snowmen. Wouldn’t it be nice if building a business fort was still so simple? I like to break the materials you need to build your business fort divide into 2 broad areas:

Business Operations – This should be your primary focus to reduce your overall risk. Questions to ask yourself include: What are your safety policies? Are you prepared for a Cal-OSHA inspection? What are your hazardous material handling policies? Do you have them? Do you monitor them? How do you make sure they are being followed? How do you treat your employees? Do you have an employee handbook? Is it collecting dust or do you follow it? How many claims have you had? What is your employee turnover rate? Do you know why employees leave to work elsewhere? All of these questions are just conversation starters for you and your senior management team. The best way of reduce risk is through ongoing dialog up and down the chain of command with a focus on improving business operations.

Insurance Coverage – No matter how proactive you are with your business operations, you can’t always eliminate risk. Sometimes Mother Nature, disgruntled employees or forces outside of your control can reap havoc on your business, which is why you need to proactively insure the potential risks.. You may weigh the risk and get coverage to cover the potential size of the claim even though the frequency is very low. It may be that no matter what you do, a claim will be filed. Some of these are called nuisance claims, which need to be taken seriously and addressed immediately. There are those people who will file a claim because they figure it will be settled and they will get some money.

What your X-Mod reveals about your company.

Now I think Workers’ Compensation deserves a special mention, especially here in California. Workers’ Comp claims are expensive. They have a long life. Early in my relationship with a business, I always ask about their X-Mod rate. A lot can be learned from that simple question. If it is high, then either they don’t have a safety program or they are not following it. A high X-Mod rate may indicate that the employee interaction is suspect. It may be an indicator of how a company views its employees, how they treat them and whether they are given adequate training for their jobs. While it takes a long time to change the X-Mod, it can be done and it can be very rewarding–and not just financially. You can also create a culture of safety-conscious employees who continually work on improving work conditions delivering better products and services to your customers. Happy employees equal happy customers.

Now you’ve identified your risks and stratified them, where do you get your insurance coverage? That will be discussed in the next blog, Think You Have Your Troops in Top Shape?

My Role in Helping Business Owners

As your B2B CFO®, everything I do is to improve the life of you, the business owner. You are important to society. I have unique processes and tools to help eliminate the barriers to your success. Let’s talk about how I can improve your life.

NOTICE: B2B CFO Partners, LLC, dba B2B CFO is an Arizona limited liability company that provides advisory and consulting services. B2B CFO® partners are independent contractors and are not officers, employees or agents of, or partners or joint ventures with, the companies they serve, nor are they independent CPAs.